Published by Forbes.com | January 5, 2023
Concessions have made a comeback as rising mortgage rates, inflation and economic uncertainty have dampened home-buying demand
In a key sign that the tide is turning in favor of home buyers, sellers gave concessions to buyers in 41.9% of home sales in the fourth quarter—the highest share of any three-month period in Redfin’s records, according to a new report from the technology-powered real estate brokerage.
That’s up from just over 30% in both the previous quarter and the fourth quarter of 2021, and outpaces the prior 40.8% high from the three months ending July 2020, when the housing market nearly ground to a halt due to the onset of the pandemic. Redfin’s concessions records date back to July 2020 and are based on data submitted by Redfin buyers’ agents.
Concessions have made a comeback as rising mortgage rates, inflation and economic uncertainty have dampened home-buying demand, giving the buyers who remain in the market increased negotiating power.
That’s a stark shift from the pandemic home-buying frenzy of late 2020 and 2021, when record-low mortgage rates fueled fierce competition, forcing most buyers to bid over the asking price and waive every contingency just to have their offers taken seriously.
“Buyers are asking sellers for things that were unheard of during the past few years. They’re feeling empowered, partly because their offer is often the only one, and partly because they know sellers have built up so much equity during the pandemic that they can afford to dole out sizable concessions.”
—Van Welborn, Redfin real estate agent in Phoenix
Welborn added, “I recently helped one of my buyers negotiate a $10,000 credit for a new roof and a handful of other repairs. We originally asked for $15,000, but were happy with $10,000 because the homeowner also agreed to sell for less than their asking price.”
Homeowners are increasingly selling for below their desired price as the housing market slows. A record 22% of home sales recorded by Redfin buyers’ agents in the fourth quarter included both a concession and a final sale price below the listing price, while a record 19% included both a concession and a listing-price cut that occurred while the home was on the market. A record 11% included all three.
